Wednesday, May 12, 2010

Why the chill in the air for NGOs?

May 10, 2010

I’ve generally been an optimist about the future of NGOs in China, but recent events have gotten me thinking otherwise. In the last few months, we’ve witnessed the Oxfam Hong Kong incident, the SAFE regulations on foreign donations, the closing down of NGOCN’s website, the Beijing University Women’s Legal Aid Center’s losing its Beijing University affiliation, and just today, the news that China’s leading AIDS activist, Wan Yanhai, has left China for the U.S. because he was being harassed by multiple government departments. So what does this all mean?

First of all, let’s get some perspective on these events. Last year (2009), Xu Zhiyong’s legal aid NGO, Gongmeng, was closed down on tax evasion charges, and Yirenping, an anti-discrimination legal aid NGO founded by Lu Jun was raided. The Olympic year saw the Sichuan earthquake, a coming out event for Chinese NGOs which played a visible role in the earthquake relief. The year prior (2007) saw the closure of an Lu Jun’s support group for Hep B carriers, a magazine called Minjian that published stories of NGO development projects, and most notably Nick Young’s China Development Brief.

In addition, the last few years has seen significant growth in grassroots NGOs, persistent rumors of revisions to the NGO registration and management regulations, a new Charity Law, and easing of the registration and management procedures for private foundations.

In short, what we have here is a mixed bag. Some bad news, and some good news. How do we make sense of all this? A few possible explanations come to mind.

One explanation is that the government is of different minds about NGOs and is trying to figure out how to best manage (codeword for control) them. The Chinese government is a very diverse, not always unified collection of agencies and individuals. The Civil Affairs department is only one of the agencies charged with supervising NGOs. In fact, there are hundreds of thousands of NGOs in China that are not registered with Civil Affairs and thus not under their supervision. Because many NGOs are registered as businesses, the Commercial and Industrial department also plays a role, as do tax authorities, and now apparently so does the State Administration of Foreign Exchange (SAFE). And last but not least, there are the security people. It’s not clear to what extent there is a coordinated campaign among all these agencies to regulate NGOs. Civil Affairs seems to be the most supportive. They are encouraging various experiments around the country to make NGO registration easier, and they support a change in the NGO regulations that would make it easier for NGOs to register with Civil Affairs. But other agencies seem to just be interested in controlling NGOs, and not figuring out a way to regulate them in ways that would improve the effectiveness and transparency of NGO work.

If this explanation is right, then we’ll see authorities continue to adopt an ad hoc approach to regulating/controlling NGOs, and continued swings in the government’s attitude to NGOs. We’ll also see further delays in the much-anticipated NGO legislation as debates and deadlock over the value of NGOs continue in policymaking circles.

Another explanation is that government leaders have arrived at a consensus about how to deal with NGOs, and that consensus is not to liberalize the environment or find a smarter way to regulate them, but to continue restricting their development. This means tightening an already restrictive regulatory environment, and cracking down on “illegal” NGOs that are engaged in advocacy and sensitive issues such as migrant worker rights, and are particularly open to foreign influences. What seems to be new here is the way in which the government is cracking down on NGOs. They are doing so not by closing down NGOs as they did with China Development Brief, but by harassing them for improper finances, or fire codes, or not properly registering their website. But they are not doing this across the board, but only targeting selected NGOs. A form of “salami tactics” or “death by a thousand cuts”.

If this explanation is correct, then recent events represent the start of a chilling trend. It means we won’t see revised NGO regulations come out, or if they do come out, they will reaffirm the status quo or be even more restrictive.

Still another explanation is a combination of the previous two explanations. That is, authorities have arrived at a consensus but that consensus represents a compromise whereby certain sectors are encouraged, but NGOs with more foreign connections or engaged in more sensitive work are targeted for harassment.

If this explanation is right, then we should see the revised NGO regulations, and other related legislation, coming out soon. Those revisions will probably represent a gradual change, e.g. liberalization, and their content will give us a better idea of what sectors are being encouraged.

Which of these explanations is closer to the mark of course requires an understanding of what is going on in high-level decision making circles. Unfortunately, that arena is a black box that we can only speculate about.

At this point, I favor the first explanation because I don’t see a consistent line or approach toward NGOs which suggests there is still debate and deadlock over just how to regulate this growing sector. But I may change my view as I get more information. Stay tuned!


  1. Hi Shawn,

    My name is Abbie Jung. I work with a Hong Kong-based venture philanthropy foundation called SOW Asia. ( I recently came across your article on The Hauser Center about Lu Fei, then saw your blog and am interested to hear your thoughts about the development of the nonprofit sector in China.

    SOW Asia invests in social enterprises trying to solve social problems....i.e., similar to nonprofits except that they have an underlying business model that will help them (in theory) become self-sustainable. At the same time, the vast majority of the profits will be recycled back into the organization in order to further the its social and/or environmental goals. I am interested to find out if you have come across any such organizations in your research.

    I'll be in Beijing this Sunday and Monday if you have some time to chat by phone or meet in person.

    Best regards,

  2. Hi Shawn,
    You know that I favor a somewhat different view, and that is that it will take some time for there to be new regs for SOa and minfei. Also that the charity law will not be brought forward for debate in the SC anytime soon. I think there are two things going on -- one is uncertainty about how to deal with sensitive issues. The other is need for more experimentation with the new CCOs.


  3. After attending a conference arranged by the Asia Foundation in Beijing last year with top Chinese government and Party leaders involved in NGO's; it appears their intention is to get some reasonable financial and operating standards first for Chinese NGOs and because there are so many this will take some time. Until then, other than the three foreign NGOs that have been approved the others will just have to wait for official approval. Seems reasonable considering the incredible outpouring of generosity and volunteerism triggered by the Sichuan earthquake.

  4. Thanks Karla and Russ for the feedback. Karla, I don't disagree with your view, in fact, I agree with everything you said there. I think there is considerable uncertainty at the top given the complexity of this issue, as Russ suggested, and that it may be some time before these new regs and laws come out. Seems there's no one at the top who is willing to make this a priority and break the deadlock.

  5. oh what about individual donors? what is the logistic for their money to be channeled to the end-users? they have to go through government/official charities as well? any regulations on individual donation? thanks!

    May, freelance writer, Hong Kong

  6. That is a good question. For individual donations, there's no reason you have to go through government/official charities, but those charities are easier to give to because they can solicit funds publicly and you can go online to their websites and donate to them. I don't think you can do that for most grassroots charities, although I need to check that for sure. There are in theory tax benefits for companies who donate to charities, but not sure if there are similar benefits for individuals.

  7. i asked around and the general comment was "government is everywhere" because implementations of projects have to go through the government at the end of the day.

    there is no set rules on financial management of NGOs/charities/foundatons. And although there are tax refunds and etc, the Civil Ministry Affairs is so weak that the other goernment departments just won't the benefits usually just exist in theory....


  8. Hi Shawn,

    I came across your blog from the hauser center website. I am planning to do a quick presentation on improving accounting transparency for NGO's in China. Both for the donor and the govt. Do you know of a current way this data/information is handled? Any thoughts/opinions will be greatly appreciated.